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Inside the rare earth separation plant, a worker checks the levels of each machine. Photo: Joel Tozer
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Estonia enters the race in scramble to secure rare earths

Joel Tozer

20th April,2011

With China's rare earth industry blighted by claims of toxic pollution, Estonian company Silmet is stepping up production to meet demand for rare earths essential in the manufacture of electrical gadgets and green technologies

In the early 1970s, the town of Sillamäe in the Ida-Virumaa region of Estonia had been taken off the map and, over time, given code names such as Leningrad 1 or Moscow 400. Closed off to the world, the Soviet Union began experimenting with a mixture of acids to try to separate rare earth elements. At the time little was known about how to extract these tight-knit elements and how exactly they could be used.

Today, companies around the world are scrambling to get their hands on any number of the 15 or 16 elements which are essential in the production of high-tech gadgets such as iPods and green technologies such as wind turbines.

'Outside of China, there are very few people who know about the hydrometallurgy of rare earths. I believe that the largest concentration of those people are right here in Sillamäe, Estonia,' David O’Brock, CEO of the rare earth supplier, Silmet, said.

Despite the name, rare earth elements are actually fairly common. Several of the elements produced in Estonia including cerium, lanthanum, neodymium, are more abundant in the Earth’s crust than lead and silver. The hard part is finding deposits that can be mined cheaply.

Many countries are reluctant to mine rare earths because of the high cost of processing the acids that are used in production and the amounts of low-level radioactive waste that are produced.

With the current crisis over radioactive leaks in Japan, the dangers of nuclear power are back on the global agenda, but few people realise that their iPhones or hybrid cars are creating problems in other small corners of the globe.

In recent years, lax environmental policies have allowed China to dominate the rare earth market, currently providing at least 95 per cent of the world’s supply. Recent reports of toxic waste polluting water streams and farming crops have hampered the booming industry.

Last September, amid a sea territory dispute, Chinese customs officials placed a trade block on all rare earth shipments to Japan for two months. Then, in an attempt to clean up the industry and preserve its resources, China recently announced a 40 per cent cut back to all of its 2011 rare earth exports.

This blocking of supply sent a wave of panic through many countries that rely on rare earth elements. Elements like cerium, which is used as a polishing powder for flat screens commonly used in televisions, computers and car windscreens. China’s export quotas have also seen the price of rare earths double, with Chinese cerium reaching 90 dollars a kilogram, compared with 35 to 40 dollars last November.

Estonia’s production to expand

David O’Brock says the prices of all of Silmet’s rare earths have at least doubled in the last three months. The problem facing Silmet is that it cannot get enough materials to meet demand.

For many years, Silmet struggled to make a profit from rare earths, with Mr O’Brock admitting that 2010 was the first year the company made a profit. Luckily, the factory was able to survive due to its production of tantalum, which is used in compact electronics, and niobium which strengthens steel in alloys. 

'If you look at how much the exports have declined over the past two years from China, we can assume that there is about 20,000 to 40,000 tonnes on the market free outside of China on the market today,' Mr O’Brock said.  'Every year this amount is growing probably by a good 10 per cent.'

Silmet is now looking to expand its production of rare earths. While Mr O’Brock would not elaborate on the exact details of the plan, he said the company was looking to invest more money this year than they have over the past five years on expansion and beyond.

'Now is a good time to invest and we’re doing that,' Mr O’Brock said. 'We’re also looking at alternative sources of raw materials. You could pick one or more of the 200 [raw material] projects outside of China today.'

The Silmet factory doesn’t represent any real threat to China’s chokehold of rare earth supply, currently producing around 3000 metric tones per year, or 2 per cent of global supply. But Gareth Hatch, an analyst at Technology Metals Research, in Illinois says it still represents potential diversity in the market.

'Any restrictions in supply from the primary source, China, naturally means that facilities such as the Silmet plant grow in strategic importance,' he said.

Inside a rare earth plant

Situated at the edge of the Baltic Sea in northeast Estonia, the Silmet factory forms the centerpiece of the industrial town. Every month, a shipment of rare earth carbonate, containing a mixture of titanium, tantalum, niobium and varying quantities of rare earths, arrives at the factory from Russia.

Before the packages are collected, the company has already cleaned their hands of the radioactive waste that many other producers have to consider. In any rare earth deposit, a certain amount of thorium exists, which when refined, leaves behind a slightly radioactive waste.

'When the mineral is cracked in Russia the uranium and the thorium come off at that time. So our partners in Russia take care of that,' O’Brock said.

Inside the factory, the smell of nitric acid immediately hits the back of your throat. 'This will clear your sinuses in no time,' Mr O’Brock said. To begin the processes of separating the elements, the acid is used to dissolve the powder into a liquid.

A key issue with rare earth production is what to do with the acids after the elements are separated. While all other countries use hydrochloric and sulfuric acid in separation, Silmet are using the nitric acid and turning the waste into a fertilizer that is sold to local companies.

'All the process waters that we use are processed here on site, recycled, reused and treated as need be. So, essentially we don’t have any "waste streams" from our production,' Mr O’Brock said.

On the second floor, the liquid is put into an extraction system where all the elements are separated. Silmet only keeps the four most abundant elements – lanthanum, cerium, neodymium and praseodymium – while all of the other rare earths are sold to its customers in China.

Production at the Silmet plant hasn’t always been 'waste free'. Since 1948, the site was used as a uranium processing plant, which is said to have provided materials for the USSR’s first atomic bomb. At the back of the factory, uranium and rare earth waste was dumped into a tailings pond, just metres from the sea.

For more than fifty years, the waste was left uncovered to the open air and its contents were at risk of spilling into the sea at any time. When Silmet shut off its waste diversion in September 2003, about six million tonnes of waste was left behind, including 1200 tonnes of uranium alone.
 
Cheryl Rofer, a chemist from Santa Fe, New Mexico, was the co-director of the 1998 NATO workshop that proposed plans to clean up the site. One concern was making sure the waste was secured.  'The dam was underlain by Cambrian blue clay, which could slip under the weight of the tailings and collapse the dam,' she said.

A joint project, funded by the European Union and all of the states on the Baltic Sea, saw the pond covered at the end of 2009. It is expected that the pond will be safely contained for more than 1000 years. However, small but 'safe' amounts of waste are still believed to enter the sea. 

A shortage of rare earth?

The use of rare earths in a wide range of consumer and energy saving products is only relatively new. Tiny amounts of rare earth are used in each product. But, as it comes into more common usage, the demand for these elements is set to grow rapidly.

While the world’s reserves of rare earth elements in countries such as the United States, Australia, Brazil and Russia is extremely abundant, the current supply continues to fall short of global demand.

But Gareth Hatch says that while some rare earths are experiencing significant demand, such as neodymium, the supply of rare earths will continue to grow.

'There are plenty of other deposits around the world that are already well underway towards production, and if they come on stream, will satisfy the world's needs for the foreseeable future,' he said.

Australian company, Lynas Group, is currently rushing to complete a massive project in Kuantan, Malaysia, that is said to be able to provide a third of world's demand for rare earths in two years. The company hopes to have the project up and running by November this year.

The factory will process ore from a mine in Western Australia, but few details have been given on how the company plans to deal with the slightly radioactive waste.

'I would have thought that there is a much bigger negative impact on the environment from transporting the materials from the mine to the port, from the port to the next port, to the processing unit and processing it in some "foreign country" where it is perhaps no longer under strict controls,' Mr O’Brock said of the project.

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